Given the grim backdrop for global growth and Australia long-standing difficulties in promoting wage inflation, there are significant inflationary headwinds in view. Jane Foley, Senior FX Strategist at Rabobank, is expecting a pullback below 0.70 on the aussie.
Key quotes
“The RBA has been dubbed as the most hawkish central bank in the G10 by some commentators and the coming months are likely to test the central bank’s resolve in maintaining this position. While the comments from the RBA are supportive for AUD/USD in the near-term, we see risk of a pullback below 0.70 in a three-to-six mth view.”
“Lower interest rates would pressure the currency, but if inflation refuses to push higher in the coming months, this may become a desirable outcome for the RBA.”
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